10 Steps to Raising a Series A

Name Russ Wilcox Partner at Pillar VC

Take a moment to pat yourself on the back. Out of the 600,000 companies started in the United States every year, only 1% raise seed capital from angels, and only 0.5% raise seed capital from institutional VCs.

Raising seed was a grueling process, and you feel eager now to leave behind all thoughts of funding and finally getting back to building your business.

Once you’ve built a company that justifies further capital, you will be ready to start raising Series A – a multi-month process where you try to convince jaded professional investors to trade you $10-15 million of cash for a one-page stock certificate. No easy task!

How can you successfully raise your Series A? Read these 10 steps, and apply their lessons.

1. Set a Timeline

After you raise your Seed Round, establish key milestones that will enable a Series A raise and socialize these with trusted advisors. Begin to continuously review your fume date. Plan on initiating your Series A raise at least 6 months out from your fume date. If you don’t think you’ll hit your key milestones before cash runs out, plan to raise a Seed extension instead.

2. Make Room to Fundraise

Free up at least 50% of your time to fundraise; reallocate responsibilities to your team.

3. Establish a Target Investor List

Compile a list of investors (see How To: Build a Series A Investor List) who have reached out to you inbound or have previously been active in your space. Evaluate investor relevance in four key areas: firm, partner, focus and check size. Identify a common contact who can make a warm introduction when you’re ready.

4. Create a Budget

Be plausibly aggressive––show investors how the numbers are achievable. Use this template and this guide to help.

5. Check Your Valuation Goals

Each venture round typically creates 20-35% dilution, regardless of the amount raised. Make sure to discuss your valuation goals with your co-founders, management, team and investors. But remember, your goal as a wise CEO is not to achieve the highest valuation for this one round. Your goal is to find a VC who is willing to invest enough money for your plan, on market terms, and is someone you will want to work with for many years to come.

6. Build an Advisory Board

Consider adding experienced entrepreneurs and luminaries to your extended team for practical advice, customer referrals and affiliation to help elevate your start-up.

7. Develop Your Story

Before you create any slides, use this template to map out your story. For Series A, the deck should have five elements: (1) an attention grabber that explains why this company has major potential; (2) the insight you reached during seed that led you to build an unexpectedly compelling hit product that the early customers love; (3) data that shows positive initial trends for your sales, operating, and profitability metrics; (4) the industry dynamics and the reason why fast growth will cause your company to achieve a permanent strategic advantage that assures years of profits; and (5) a specific plan for how the additional Series A investment will result in rapid growth. Use this pitch deck template and the guide to help with your pitch.

8. Reach Out to Investors

Begin with friendly investors and distant prospects first; saving your top prospects for when you have perfected your pitch. As you take meetings, listen for questions. Every time you hear a new tough question, either update your slides, or write a new slide as an answer and add it to your Appendix. Always try to pitch in person.

9. Manage Term Sheets

Your goal is not only to get one term sheet, but ideally to receive two or more term sheets to compare. Once you’ve seen your options, use this guide and this blog post to help with managing term sheet negotiations.

10. Choose Wisely and Check References

Before signing your final term sheet, remember, there’s no way for you to fire your VC –– be sure there is a cultural fit and alignment of objectives. In addition to the references a VC offers to you, backdoor reference check. Find several CEOs who have taken money from this VC Partner (particularly those who experienced some bumps in their journey) and call them up directly to ask how it has gone. You may also encourage the VC to share references with founders with whom they’ve navigated tough situations. 

Now you’re ready to sign a term sheet, close your round, and get back to building! For more information on any of these steps, read the full How To: Raise a Series A Guide.

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How To: Raise a Series A Guide